Silicon Valley Is Suffering From A Lack of Humanity

The genius of Steve Jobs lies in his hippie period and with his time at Reed College, the pre-eminent Liberal Arts college in North America. To his understanding of technology, Jobs brought an immersion in popular culture. In his 20s, he dated Joan Baez; Ella Fitzgerald sang at his 30th birthday party. His worldview was shaped by the ’60s counterculture in the San Francisco Bay Area, where he had grown up, the adopted son of a Silicon Valley machinist. When he graduated from high school in Cupertino in 1972, he said, “the very strong scent of the 1960s was still there. After dropping out of Reed College, a stronghold of liberal thought in Portland, Ore., in 1972, Mr. Jobs led a countercultural lifestyle himself. He told a reporter that taking LSD was one of the two or three most important things he had done in his life. He said there were things about him that people who had not tried psychedelics — even people who knew him well, including his wife — could never understand.

Deep Down We All Know Silicon Valley Needs The Humanitarian Vision of Steve Jobs

The genius of Steve Jobs lies in his hippie period and with his time at Reed College. With the deep ethical problems facing technology now, we need Jobs vision more than ever.

To his understanding of technology, Jobs brought an immersion in popular culture. In his 20s, he dated Joan Baez; Ella Fitzgerald sang at his 30th birthday party. His worldview was shaped by the ’60s counterculture in the San Francisco Bay Area, where he had grown up, the adopted son of a Silicon Valley machinist. When he graduated from high school in Cupertino in 1972, he said, “the very strong scent of the 1960s was still there. After dropping out of Reed College, a stronghold of liberal thought in Portland, Ore., in 1972, Mr. Jobs led a countercultural lifestyle himself. He told a reporter that taking LSD was one of the two or three most important things he had done in his life. He said there were things about him that people who had not tried psychedelics — even people who knew him well, including his wife — could never understand.

Decades later Jobs flew around the world in his own corporate jet, but he maintained emotional ties to the period in which he grew up. He often felt like an outsider in the corporate world, he said. When discussing Silicon Valley’s lasting contributions to humanity, he mentioned in the same breath the invention of the microchip and “The Whole Earth Catalog,” a 1960s counterculture publication. Jobs’ experience rings with my own experience in the Santa Clara Valley at that time. Jobs and I were both deeply affected by Stewart Brand, the visionary behind The Whole Earth Catalog. Stanford professor Fred Turner has documented this period in his book “From the Counterculture to Cyberculture, Stewart Brand, the Whole Earth Network, and the Rise of Digital Utopianism.

For me this journey also began with the extraordinary vision of Marshall McLuhan, the Canadian professor of communications, who literally predicted the emergence of the World Wide Web and “The Global Village,” like some kind of modern day Nostradamus.

Stewart Brand is also featured in Tom Wolfe‘s book, “The Electric Kool-Aid Acid Test,” along with Ken Kesey’s Merry Pranksters and The Grateful Dead. I had the great good fortune to formally meet Brand at a COMDEX Microsoft event in a hangar at McCarren Airport in Las Vegas and was immediately impressed by him, as was Jobs. Not surprisingly, Brand was an invited guest at the Microsoft event, having already seized on the importance of the personal computer and the prospect of a networked World. Recently, in another anecdote on that time, Tim Bajarin shared a wonderful story about Job’s counterculture friend and organic gardener who remains the manager of the landscape at the new Apple campus, retaining the feeling of the original Santa Clara Valley orchard economy, that some of us can still remember.

It is important to think back to that time in the Bay Area and the euphoria of the vision of “digital utopianism.” It grounds me and helps me to understand where we have gone so terribly wrong.

Digital utopianism is now dead. I have written about its sad demise on this blog. The wonderful vision of digital utopianism and the Web has been perverted by numerous authoritarian governments, now including our own, resulting in a Balkanized Web and a dark Web pandering all kinds of evil. This is the problem we face and the urgent need for greater emphasis on ethics. What about human life, culture, and values? So many areas of technology are on the verge of deep philosophical questions. Uber has become the poster child for everything that is wrong with Silicon Valley. I ask myself, “What would Steve Jobs have said about Travis Kalanick and Uber?” I think we know the answer. Ironically, Silicon Valley has a center for research and study in ethics, the Markkula Center for Applied Ethics at Santa Clara University. Mike Markkula was an Intel marketing guy who quit Intel to join with two crazy long-haired guys in Cupertino.

I am a Liberal Arts & Humanities graduate myself, including graduate study at Oxford University. When I returned from England I asked the obvious question: Now how do I make a living? As it happened, I very improbably landed my first real job at Intel Corporation. When I asked why I was hired, the answer was that I was judged to have the requisite talent and aptitude if not the technical knowledge. I later developed a reputation for being very “technical” by the process of “osmosis,” by simply living in a highly rarified technical culture and receiving whiteboard tutorials from friendly engineers. I was thrown into a group of Ivy League MBA’s. We wistfully shared a desire to have the others’ educations, but simply working together made us all more effective. Amazingly my career grew almost exponentially and I attribute my success to that cross-fertilization.

While with Intel in Hillsboro Oregon, someone approached me to represent Intel at a talk with Reed students. I was cautioned that few if any Reed students would be interested in working for Intel, but they would be very intellectually engaging. That proved to be a significant understatement. In the end, I believe that perhaps two dozen “Reedies,” as they are known, joined Intel, one of whom went on to a stellar career as a Silicon Valley venture capitalist. A significant part of my later career has been devoted to using my Humanities education background to assess and translate deep technology in human terms for the benefit of both management and potential customers.

Today, nothing of my story would ever happen, but the influence of the Humanities and Arts in business seems more sorely needed than ever.

The Importance of “Convergence” In Market and Industry Analysis

If You Get Technology “Convergence” Wrong, Nothing Else Matters

I came across this book during my most recent visit to the UBC Vancouver campus. As good as I think this book is at focusing attention, in workbook style, on the importance of market and industry analysis in new venture due diligence, there is an issue that I think is not adequately addressed by any model or theory: not Porter, not STEEP or SWAT. Convergence is the issue.

We can imagine and even potentially envision a very cool business idea, but if the technology to achieve it is not ready, not sufficiently mature, the idea is Dead on Arrival (DOA). I do not mean to pick on young entrepreneurs, but I reviewed a business concept last week that was a superb and compelling idea, but the technology necessary to achieve it simply was not there, either in terms of its capability or its price point. I am confident that it will be there in time, but it is not now. As if to make my point, Apple announced that it was acquiring a company for $20 Million in the exact same technology area: indoor location tracking (no small feat). At this point it is not clear that the acquired company has any extraordinary intellectual property or expertise, and the article primarily focused on the point that this “location identification” technology was “heating up.” It looks like it may be a simple “aquihire.” Global Positioning and geo tagging as in smart mobile phones, radio frequency identification technology (RFID), and inertial guidance are all currently used in various combinations by a host of competitors (too many) to achieve required levels of accuracy, immediacy and cost. A local industrial RFID company has just closed its doors because it simply could not compete and make money. The simple problem was that this company’s idea, as compelling as it was, could not achieve the necessary price point, or possibly would not even work.

So we have the problem of “convergence.” Great idea but the technology simply is not ready….yet.

I have three personal case study examples of the problem of “convergence,” that every potential entrepreneur should study. I have to admit that I was a senior executive at all three of these Silicon Valley companies, one of which actually made it to the NASDAQ exchange. All of them had the “convergence” problem.. Too early for the available technology.

1. Silicon Graphics. Silicon Graphics was founded in the late 1980’s by a pre-eminent Stanford professor, Jim Clark, on the idea that 3D visualization of complex problems would become the next big wave in technology. As a minor side business, it also excelled at computer animation, a growing new market of interest to Steve Jobs and others. It is now obvious that Clark was onto something that has now finally become the Next Big Thing, but at that time, the available technology simply made it too difficult and too expensive. Silicon Graphics no longer exists. Silicon Graphics crown jewel was its enabling software code, the SGI Graphics Library. It does still exist in open form.

2. iBEAM Broadcasting. iBEAM was the precursor of YouTube, but too far ahead of its time. the founder, Mike Bowles, a former MIT professor, envisioned streaming media across the Internet, but this was in 1999. Intel, Fox Entertainment, Reuters, Bloomberg, Microsoft were all involved, some investing significant sums in the company. We tried mightily to make it happen for Mike, but there were technology convergence problems. The Internet at that time simply did not have sufficient reliable broadband capability. In 1999 the vast majority of Internet users still used a dial-up connection. The company, with help from Microsoft and its other big pockets investors turned to satellite transmission, which is immensely expensive. I did learn a lot about the satellite business. Great idea, way too early, and the company failed early.

3. P-Cube. In 2001, I was approached by prominent friends at two downtown Palo Alto venture capital firms to consider joining an Israeli startup in which they had invested. The idea was wildly popular at the time….traffic policy management and so-called Internet traffic shaping. I enthusiastically joined the new company and became its first U.S. based employee. The compelling idea was simple, make money by charging for bandwidth. The background idea was to enable deep IP packet payload snooping to prioritize traffic, but also for its political potential. This is the technology that Dick Cheney employed after 9/11 to snoop all Internet traffic. The only problem was that the technology was simply not yet ready. The P-Cube Internet traffic switch was a 24 layer printed circuit board (hideously difficult to fabricate), with 5 IBM PowerPC chips, 1 Gig of onboard memory (at the time bleeding edge, but today laptops have more memory), a host of “application specific integrated circuits” (ASIC), and to top it off a proprietary software language to program the box. In the end, P-Cube burned up $100 Million in venture capital, and I had great fun traveling the World selling it, but the box never worked, largely because the technology simply was not there.. P-Cube’s assets were bought by Cisco Systems and t0day such capability is built into the boxes of Cisco System, Juniper Networks and others.

The key takeaway lesson from this: do not underestimate the importance of technology convergence with a great idea.

Uber’s Travis Kalanick Plumbs New Depths As Silicon Valley’s Biggest “Jerk”

Even in the early golden years of Silicon Valley, there were “Silicon Valley Jerks,” and unpleasant corporate cultures. Larry Ellison and Oracle are the first to come to mind. Oracle was known as a very hostile, unpleasant place to work and there was a revolving door of senior executives who were fired by Ellison or who resigned. Microsoft has always been known as something of a “sweatshop,” with an excessively competitive and hostile culture, which may finally be changing with the new CEO, though his comment about women and promotions caused a flap. We now know about the “Bad Steve” Jobs, though Apple has not had the kind of negative reputation of some of the other companies. The late Jeanette Symons of Ascend Communications was notorious for her anti-social behaviour but also founded one of the most successful Internet infrastructure companies in history. Even Intel, which has been generally regarded as a very positive corporate culture has had its share of “jerks.” Former Intel VP Jack Carsten had the perverse reputation for being the catalyst for numerous resignations from Intel, and new startup companies that resulted.

But those examples pale in comparison to the current crop of new Silicon Valley entrepreneurs. Travis Kalanick, CEO of Uber has transformed himself into the poster child for this problem. What is most disturbing, perhaps for Uber’s investors, is a stunning lack of attention to the perceptions around Uber’s brand image. Last week, Buzzfeed broke the story of an Uber senior executive who apparently planned a smear campaign against journalists, in particular, Sarah Lacy of PandoDaily. The exec spoke of internal Uber meta data known as “Godview” that would be used, which raised questions about personal data privacy, and has now led to a formal inquiry from U.S. Senator Al Franken. SFGate, the Web arm of the San Francisco Chronicle has also posted an article posing questions about Uber’s employment and “partnership” arrangements with drivers. Kalanick may now have a headache, but he is not alone. Who can forget venture capitalist Tom Perkin’s statement that the treatment of the rich in the United States was like the persecution of the Jews by Nazi Germany? The infighting among founders at Twitter has been an ugly airing of dirty laundry, and the ostentatious “nouveau riche” behaviour of others has caused ripples of resentment though the Valley and San Francisco. Much of the criticism seems to center on the venture capitalists who have encouraged these personality types, but in fairness there are venture capitalists who are as appalled as everyone else, and refuse to invest in arrogant “God’s gift” personalities. I have also written two earlier blog posts about this problem, from my own personal perspective, having survived one of Silicon Valley’s jerks. Links to my two previous posts are shown below.

From SFGate, via Business Insider, Saturday November 23rd, 2014, by Alyson Shontell

There’s a notion that some people become successful company founders because they have the right “Startup DNA.”

The DNA is comprised of characteristics like “resilience” and “ability to accept risk.”

Another characteristic many top entrepreneurs share is arrogance. Or worse, just being a huge jerk.

While reporting a long profile of Travis Kalanick last winter, Business Insider found a lot of people who thought Kalanick was a legendary CEO.

Friends compared him to Steve Jobs and Larry Ellison.

But some who were in awe of Kalanick also said he was a jerk.

“Sometimes,” one acquaintance said of Kalanick, “–holes create great businesses.”

Inside Silicon Valley, arrogance runs rampant and investors seem to reward ruthless behavior with piles of cash.

There are numerous examples of founders who have had moments of terrible behavior that later became infamous. The founders might not be jerks all the time, of course. Everyone has moments when they behave boorishly. But sometimes the stories are so unbelievable, it can leave a lasting negative impressive of the person — that whether criticism is deserved or not.

For instance, Mark Zuckerberg, who is now worth tens of billions, famously ousted his friend Eduardo Saverin from Facebook. He also stole his business idea from the Winklevoss twins. “Yah, I’m going to f– them,” he told a friend over IM about the pair. “Probably in the ear.”

Snapchat CEO Evan Spiegel wrote a number of misogynistic-sounding emails when he was in college to his fraternity brothers. Once, Spiegel was so angry with his parents, he reportedly cut himself out of family photos.

Twitter’s co-founders back-stabbed each other repeatedly: Founder Noah Glass was booted out of the company. Ev Williams and Jack Dorsey were both given, and then stripped of, the CEO title. And Jeff Bezos, who runs Amazon, wreaks havoc in his organization by sending a single-character email: “?”

Even Steve Jobs, one of the world’s most-praised entrepreneurs, was said to have two sides. Jobs’ biographer, Walter Isaacson, portrayed the late Apple CEO as “Good Steve” and “Bad Steve.” An example: Jobs once stormed into a meeting and called everyone “f–ing dickless –holes.”

Robert Sutton spent a lot of time conducting research for his book, “No –hole Rule: Building a Civilized Workplace and Surviving One that Isn’t,” What he found was disappointing.

“Even people who worked with Jobs told me that they’d seen him make people cry many times, but that 80 percent of the time he was right, ” Sutton said. “It is troubling that there’s this notion in our culture that if you’re a winner, it’s okay to be an –hole.”

It is troubling that there’s this notion in our culture that if you’re a winner, it’s okay to be an –hole.

The Atlantic’s Tom McNichol agrees. He wrote an article titled: “Be a Jerk: The Worst Business Lesson from the Steve Jobs biography.”

Here’s an excerpt:

The ease with which people can possess astonishingly contradictory qualities is one of the mysteries of human nature; indeed, it’s one of the things that separates humans from, say, an Apple computer. Every one of the components that makes up an iPad is essential to the work it produces. Remove one part and the machine no longer performs its job, and not even the Genius Bar can fix it. But humans are full of qualities that are in no way integral to their functioning in the world. Some aspects of personality have little or no bearing on whether a person performs well, and not a few people succeed in spite of their darker qualities.

So, is it possible to be nice and to be wildly successful in business? And in Silicon Valley, where people praise Steve Jobs’ bad habits and founders rag on the homeless, can you be financially rewarded if you’re nice?

One venture capitalist whose firm implemented a “no –holes policy” passed on an investment in Uber. This person said Kalanick didn’t click with any of the partners and that he acted like he was “God’s gift.”

Other investors struggle with the decision to invest in personalities over returns.

“I want not to invest in jerks,” says former Silicon Valley investor, Eileen Burbidge. Burbidge is now a VC at London’s Passion Capital, which has invested in startups like Lulu and Go Cardless. “Personally I believe life is too short. [But] I have wondered if this is actually a bad philosophy as an investor. I’d like to think not but I’m supposed to back founders for the best ROI, not personality.”

I want not to invest in jerks …But I have wondered if this is actually a bad philosophy as an investor. I’m supposed to back founders for the best ROI.

Mark Suster, a Los Angeles-based investor, also isn’t sure what to make of jerks in business. He lists “integrity” as a bonus characteristic when it comes to top entrepreneurs’ DNA.

“I believe that integrity and honesty are very important to most venture capital investors,” he wrote on his blog, Both Sides of the Table. ” Unfortunately, I don’t believe that they are required to make a lot of money.”

Many agree that being an overly aggressive entrepreneur tends to pan out.

“As much as [Travis] is inspirational, he is controversial,” a former colleague of Kalanick’s said. “If he were less brash, I don’t think he would get half as far as he did.”

Adds another Kalanick acquaintance: “There is absolutely no way [Uber] would have gotten where it is without Travis and his arrogance. Not without him being like, ‘I’m going to take over the world.’ He has the Steve Jobs mentality that ‘It’s my way or the highway.'”

One person who firmly believes you can be nice and succeed is Paul Graham. He runs top startup accelerator Y Combinator and he’s made Sutton’s “no –hole” rule popular in tech. He has backed billion-dollar startups such as Dropbox and Airbnb.

Graham says well-known founders like Jobs and Bezos can’t be judged by their terror tales. “Famous founders who seem to be –holes might not be,” Graham told Business Insider via email. “I’m not saying they are or they aren’t, just that it is extremely hard to tell what a famous person is really like. You can’t judge them based on anecdotal evidence, which is all you ever have.”

Graham chooses not to invest in jerks because he doesn’t want to be around them. Investors and founders end up spending a lot of time together. Getting rid of one or the other can be more difficult than getting a divorce from a spouse.

“The reason we tried not to invest in jerks initially was sheer self-indulgence,” says Graham. “We were going to have to spend a lot of time with whoever we funded, and we didn’t want to have to spend time with people we couldn’t stand. Later we realized it had been a clever move to filter out jerks, because it made the alumni network really tight. We’ve funded over 630 startups now, and when founders of different startups meet there is an automatic level of trust and willingness to help one another. Much more than alumni of the same college for example.”

His take: Be nice and you can find success.

“It’s certainly possible to build a multi-billion dollar startup without being a jerk,” Graham says. “We’ve funded several, and the founders are all good people. In fact, based on what I’ve seen so far, the good people have the advantage over the jerks. Probably because to get really big, a company has to have a sense of mission, and the good people are more likely to have an authentic one, rather than just being motivated by money or power.”

The Silicon Valley Jerk Conundrum

Most people probably have no idea who Jeanette Symons was as a person, or even her name. Yet, she became one of Silicon Valley’s most famous entrepreneurs. She tragically died in the crash of her Lear Jet with her adopted son, some years ago. She is right up there with Steve Jobs in terms of her accomplishments, her intellect, and her utterly horrible personality. I worked for Jeanette. This article from the San Francisco Chronicle is an excellent exploration of Silicon Valley entrepreneurs, and the “a**hole” conundrum of their eccentricities that can also make them highly successful. There has also been a recent major controversy about SV entrepreneurs arrogance and insensitivity to others. This is definitely NOT Canadian. My fear is that Canadians are not prepared for it. My students know that I have experienced this personally in my Silicon Valley career numerous times, most notably with the late Jeanette of Ascend Communications, who was a notorious asshole like Steve Jobs. Not easy to reconcile it, other than to live with it.

The Silicon Valley Jerk Conundrum

Most people probably have no idea who Jeanette Symons was as a person, or even her name. Yet, she became one of Silicon Valley’s most famous entrepreneurs. She tragically died in the crash of her Lear Jet with her adopted son, some years ago. She is right up there with Steve Jobs in terms of her accomplishments, her intellect, and her utterly horrible personality. I worked for Jeanette. This article from the San Francisco Chronicle is an excellent exploration of Silicon Valley entrepreneurs, and the “a**hole” conundrum of their eccentricities that can also make them highly successful. There has also been a recent major controversy about SV entrepreneurs arrogance and insensitivity to others. This is definitely NOT Canadian. My fear is that Canadians are not prepared for it. My students know that I have experienced this personally in my Silicon Valley career numerous times, most notably with the late Jeanette, founder of Ascend Communications, who was a notorious asshole like Steve Jobs. Not easy to reconcile it, other than to live with it. Human Resources people are an utter waste of time in situations like this. They have no idea what to do, can do nothing, and simply sit around waiting for Godot to arrive. It all seems to work and few leave so long as the value of the stock options continue to appreciate.

Why So Many Tech Founders Who Are Jerks Become Insanely

Rich And Successful

Alyson Shontell, provided by

Published 5:45 am, Saturday, January 18, 2014

Steve Jobs

“Startup DNA” is the idea that the world’s best entrepreneurs, like Steve Jobs and Jeff Bezos, have some inherent talent they were born with that made them successful.

The DNA is comprised of characteristics like “resilience” and “ability to accept risk.”

Another characteristic many top entrepreneurs share is arrogance. Or worse, just being a huge jerk.

Recently, I met with a lot of people to discuss rising Silicon Valley star, Travis Kalanick.He’s the CEO of Uber, and his car-sharing service was recently valued at $3.4 billion. Friends have compared him to great entrepreneurs like Steve Jobs and Larry Ellison.

But Kalanick is a polarizing figure. He’s frequently described as both “awesome” and a jerk.

“Sometimes,” one acquaintance said of Kalanick, “–holes create great businesses.”

Another person noted how strange that concept was. How can people both both marvel atand dislike Kalanick?

“If Travis Kalanick is the Michael Jordan poster that young entrepreneurs have hanging on their walls, that’s sad,” this person said. “Being a jerk isn’t ‘awesome’ or ‘badass.’”

Kalanick did not respond to a request for comment.

Outside of Silicon Valley, most people would agree. But inside, arrogance runs rampant and investors seem to reward ruthless behavior with piles of cash.

For instance, Mark Zuckerberg, who is now worth about $20 billion, famously ousted his friend Eduardo Saverin from Facebook. He also stole his business idea from the Winklevoss twins. “Yah, I’m going to f– them,” he told a friend over IM about the pair. “Probably in the ear.”

Snapchat CEO Evan Spiegel is in the middle of a lawsuit with his former Stanford friend, Reggie Brown. Spiegel lost his temper with Brown and locked him out of the app shortly after it launched. Once, Spiegel was so angry with his parents, he reportedly cut himself out of family photos.

Robert Sutton spent a lot of time conducting research for his book, “No –hole Rule: Building a Civilized Workplace and Surviving One that Isn’t,” What he found was disappointing.

It is troubling that there’s this notion in our culture that if you’re a winner, it’s okay to be an –hole.

Memorable Commencement Speeches – Public Speaking At It’s Best

In honor to my UBC Management students graduating this month and early next month, I am posting this compilation of videos of commencement speeches. Yes, the Steve Jobs’ legendary Stanford commencement address is here (Jobs wore his trademark levi’s under his academic gown), but the others are equally compelling. The David Foster Wallace “What is Water?” speech is also here, but as a link to that video at the bottom of this post.

Memorable Commencement Speeches– Public Speaking At It’s Best

Reblogged from The Galaxy, by Steph S. Mata

MAY 26

Congratulations!

1. John Green’s Commencement Speech 2013 – The most recent.

2. J.K. Rowling Speaks at Harvard Commencement 2011

3. Harvard University 2011 Class Day Speech by Amy Poehler

4. Steve Jobs‘ 2005 Stanford Commencement Address, my personal all-time favorite.

The Commencement Speech I Wish Someone Had Given at My Graduation (justinkownacki.com)
Wall Street Journal: “This Is Water” Commencement Speech Goes Viral on the Net(mayo615.com)
Arianna Huffington’s Commencement Speech On ‘Redefining Success: The Third Metric’(huffingtonpost.com)

WSJ: “This Is Water” Commencement Speech Goes Viral on the Net

The Wall Street Journal has highlighted this commencement speech, and I thought it so good, I had to share it here with my UBC Management students. It is at least as good as Steve Jobs 2005 Stanford commencement address, and it was also given in the same year, 2005.

Ironically, this commencement speech is by a young novelist you probably never heard of (David Foster Wallace), to the graduating class of the small private, liberal arts (Uh oh, there’s that liberal word again!) college, Kenyon College, in Gambier, Ohio.

David Foster Wallace, Novelist, Deceased

It was given in the same year, 2005, as the now legendary Steve Jobs commencement speech at Stanford. Wallace’s commencement speech is easily as profound as Job’s. Jobs died of cancer. Wallace committed suicide in 2008, three years after this speech. But what is important is that despite Wallace’s persistent depression, his speech is a rousing affirmation of life, and being responsible for all of your decisions, and not shirking from your existential angst, at being completely and independently responsible for everything you do in your life. Following is an edited 9 minute YouTube video of Wallace’s address. The full 22 minute video of his commencement address is available on YouTube for those who wish to have the full experience.

…and just for the record, this is another powerful example of a great public speaking event.

Microsoft’s New End Game Strategy: Pray

In a further episode of my earlier posts on the Mega Mobile Market Share War, it would seem that International Data Corporation (IDC) and Gartner, the two leading high tech industry analysis firms, are haggling over whether the precipitous drop in quarterly PC sales is 11. 2% or 14%. It also adds evidence to the accelerating rate of change in the corporate life cycle. Corporate life cycle events that took a decade are now occurring in a few short years.

PC Sales in Freefall: Wall Street Journal

Quarterly PC Shipments Drop 14% as Windows 8 Fails to Stem Advance of iPads and Android Devices

Mega Mobile Market Share War Moving At Breathtaking Speed to the End Game

Any way you look at it, it is a catastrophe for everyone in the PC business, and a further piece of the puzzle in determining who will win and lose in mobile. Shares of Lenovo, HP, Microsoft, and even Apple are all down as the market reacts to the news. This is doubly bad news for Microsoft, whose strategy seems to have been to introduce Windows 8 to bolster lagging PC demand, while building for the future with tablets and smartphones. It appears that the bottom has fallen out for Microsoft in more ways than one. First, we have the dismal forecasts for Windows mobile, also from IDC. Microsoft had been forecast to have perhaps 8% of the smart mobile OS market by 2015, fighting with Blackberry for the leftovers not taken by Apple IOS or Android. Microsoft’s mobile device partner, Nokia, is not looking too healthy in the mobile device war. If I were a Finn from Nokia, I would be camping out in Mountain View, not Redmond. Last week’s announcement that Facebook would adopt a modified version of the Android OS from Google, would seem to further dim Microsoft’s chances of finding a survivable market share in mobile, much less Blackberry.

No one has mentioned Dell Computer, currently in the midst of a protracted investor battle over privatization, pitting Michael Dell against Carl Icahn and the Blackstone Group. The market news today has undoubtedly impacted this situation in a major negative way. Michael Dell waited too long, and don’t forget that Microsoft is also a player in the original Dell plan to go private.. This is nothing less than a corporate train wreck. I could envision Dell now perhaps closing its doors, and Icahn, waiting like a predator to buy the deceased’s assets for a song.

Frankly, for those of us who were forced to contend with Microsoft’s unbelievable arrogance and hubris in the late 1990’s, we view the likely difficult times ahead for Microsoft with some irony. The way it is playing out, it is extremely unlikely that Microsoft or Blackberry will survive in their current forms. Meg Whitman will now probably announce the third or fourth reversal in PC strategy at HP and exit the business once and for all, to save HP.

IBM was incredibly smart to sell out to Lenovo when it did, and Lenovo must now be asking itself if buying the PC business from IBM was such a good idea, and rethink where it is headed.

Has Intel Corporation moved rapidly enough into mobile low power devices, and new markets like “perceptivity computing” which they showcased at CES this year?

It does seem increasingly likely that Google Android is in an unassailable position to win the Mega Mobile Market Share War. Apple and IOS will be number two. I would also offer that Apple’s situation has been influenced by a number of other ancillary factors. The death of Steve Jobs and Tim Cook assuming the reins of the company is one key factor, still not completely clear in its effect. Rumors began to float today that Cook would announce the first true mobile wallet app at the upcoming Apple Developer’s Conference. I just don’t see mobile payments as being the Apple “killer app” that some in the high tech blogosphere are calling it. Apple does not have a monopoly on mobile payment systems, and most believe that “point of sale” (POS) equipment will take nearly a decade to roll out. Another way of making my point is to ask why Apple left a “near field communication” (NFC) chip out of the iPhone 5 if Apple considered NFC and mobile payment to be the next big thing? That is the other factor: Apple arrogance and monopoly mentality that has been part of the Apple culture since the early days. It is Apple’s Achilles heel.

So my final word on all of this is that I have great respect for Eric Schmidt, Larry Page and Sergei Brin at Google. But even if Google and Android win the MMM Share War, as we all know, competitive advantage is a fleeting thing. Google need only watch Microsoft’s current conundrum to be reminded of that fact.

The Importance of “Convergence” In Market and Industry Analysis

I came across this book during my most recent visit to the UBC Vancouver campus. As good as I think this book is at focusing attention, in workbook style, on the importance of market and industry analysis, there is an issue that I think is not adequately addressed by any model or theory: not Porter, not STEEP or SWAT. Convergence is the issue.

If You Get Technology “Convergence” Wrong, Nothing Else Matters

So we have the problem of “convergence.” Great idea but the technology simply is not ready….yet.

The key takeaway lesson from this: do not underestimate the importance of technology convergence with a great idea.

Silicon Valley Rock Star Geoffrey Moore: The Tide Has Turned

Geoffrey Moore is the author of the classic book on Silicon Valley entrepreneurship, Crossing the Chasm, and now a number of other great books. I first met Geoff when he was working for Regis McKenna, Intel’s legendary PR guru in the early years. I think of Geoff as one of the best marketing minds in high tech. I strongly recommend that my UBC Faculty of Management entrepreneurship students follow Geoff on LinkedIn. In the piece below, Geoff argues for a resurgence of Big Ideas in IT, and for us to stop wasting time with low end consumer markets (translation=”already way too many apps for that!”). I had forgotten the Steve Jobs quote at the very end. Priceless!

Geoff is also a great public speaker. His use of humour is one of his greatest assets, as he makes important points. See him on YouTube as well. This short excerpt of Geoff is from the Stanford eCorner site.

Reblogged from LinkedIn

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The Tide Has Turned

It is a fool’s errand to call the top of anything in an investment context, so please keep my cap and bells ready to hand. But there are all kinds of signals these days that the consumer IT boom has peaked, not the least of which was the deep fog of underwhelm that settled across the latest CES in Las Vegas. Add to that Apple down 30% from its highs, Google tracking pretty much to the NASDAQ, Facebook working its way back to its IPO price, Zynga 50% under water, and you see what I mean.

Obviously this was to be expected. Nothing goes up forever except analyst extrapolations to justify a BUY stock rating. And no one should think about a retreat from our universal conversion to all things digital. Instead, they should turn their eyes to the enterprise.

2013, in my view, will be the first of five to seven very productive years for IT vendors serving the enterprise, as sector after sector in our economy and around the world capitulates to digital transformation. Retail is in the chute at present, following a path already trod by financial services, media, advertising, travel and leisure, Telco, and high tech. Automotive is right behind, and consumer packaged goods is on deck. But the really big plays will come from the social services sector—education, state and local government, and health care. Here, by one means or another, there will be a breakthrough in the “hostage crisis” that holds an entire nation in check to preserve legacy interests in each profession. There is simply not enough money and not enough trained professionals to stay the current course.

IT makes its money by releasing trapped value and enabling next-generation value add. Social services represent a “target rich” opportunity for both. Some of this will come from the public coffers, some from private enterprise, but either way the returns on IT investment will be compelling. At the low end, they will come from automating and commoditizing services that today are provided manually or in person, often by fiat of regulation or labor contract. This will free up time, talent, and management attention to attack the middle of the price-performance curve, where productivity gains translate into better faster deployment of routine but high-value interactions, typically one on one, whether that be in teaching, patient care, or citizen services. And at the high end, we will continue venture style investments, again both public and private, to exploit the amazing powers of big data analytics, massive simulations, social networking, and mobile applications, seeking out new trends, new levers, and new therapies.

In all these areas, as we have argued at length elsewhere, systems of engagement will take precedence of systems of record. But as many have pointed out, it actually requires a synthesis of the two to deliver on the promises made above. And that will take talent. And that is what is out of position at the present moment. Too much talent is still hanging out at the consumer IT water holes—time to migrate over to the enterprise side, whether that be to boutique consultancies specializing in the new IT, or next-generation services teams within established IT vendors, or pockets of enlightenment in enterprise IT organizations themselves. Regardless of the venue, the user experience design challenges will be just as demanding as on the consumer side, and the societal returns will be much, much higher.

In 1986, Steve Jobs famously challenged John Sculley, asking him if he wanted to keep on making sugar water or help Apple change the world. While that did not quite work out the way either of them intended, the challenge itself still holds. Do you want to spend your next decade developing more digital distractions to amuse people while they stand in line at Starbuck’s, or do you want to take the human race to the next plateau?

Your call.

_________________________________________________________________________

That’s what I think. What do you think?

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Geoffrey Moore | Escape Velocity | Geoffrey Moore Twitter | Geoffrey Moore YouTube

College Education In Crisis: By Bill Gates

This Bill Gates PowerPoint presentation provides further evidence, if we didn’t already know, that higher education is being short-changed, at the expense of our future productivity and innovation. The Toronto Globe & Mail just recently published a similar article from a Canadian perspective.

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